Title
Hidden Divergence and Candlestick Strategy in Binary Options Market
Element(s)
  • Candlestick Pattern(Engulfing, Hammer, Piercing Line, Tweezer …)
  • Awesome Oscillator
  • RSI (8)

Call signal

Bullish Hidden Divergence on a long upward trend can be detected with RSI or AO. We utilize AO to identify Bullish Hidden Divergence. On that long upward trend a compact downward would shape a Convergence.

If tail-ends of both Convergence and Bullish Hidden Divergence (last bottoms) overlap each other, then a Call signal would be generated.

On the last valley a significant reversal Bullish candlestick (such as Hammer, Tweezer Bottom, Piercing Line and Bullish Engulfing) would be a convenient confirmation on Call signal.

If price reaches Entry Price, given signal will become active. In case that traders cannot place the Call order on given contract when price passes the Entry price, then given Call signal becomes invalid.

On a special occasion, after price crosses the Entry price if it bounces back toward bottom and proceeds lower than Entry price before ordering Call contract becomes unavailable then given Call signal remains valid and reliable.

  • Entry Price: High Price of last candlestick
  • Target Price: length of last candlestick over Entry Price

Put signal

Bearish Hidden Divergence on a long downward trend can be detected with RSI or AO. We utilize AO to identify Bearish Hidden Divergence. On that long downward trend a compact upward would shape a Divergence.

If tail-ends of both Divergence and Bearish Hidden Divergence (last tops) overlap each other, then a Put signal would be generated.

On the last peak a significant reversal Bearish candlestick (such as Shooting Star, Tweezer Top, Dark Cloud and Bearish Engulfing) would be a convenient confirmation on Put signal.

If price reaches Entry price given signal will become active. In case that traders cannot place the Put order on given contract when price passes the Entry price, then given Put signal becomes invalid.

On a special occasion, after price crosses the Entry price if it bounces back toward top and proceeds higher than Entry price before ordering Put contract becomes unavailable then given Put signal remains valid and reliable.

  • Entry Price: Low Price of last candlestick
  • Target Price: Length of last candlestick below Entry Price

Divergence and Hidden Divergence Strategy

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